On March 31, 2026, the U.K.'s Competition and Markets Authority (CMA) announced a 'strategic market status (SMS) investigation' into Microsoft's suite of enterprise software, which includes Windows, Word, Excel, Teams, and the AI platform Copilot. The probe, set to begin in May, aims to address concerns about Microsoft's licensing practices in cloud services and ensure a level playing field as AI becomes increasingly integrated into business software tools [1]. Hundreds of thousands of U.K. businesses and public sector organizations rely on Microsoft's business software daily, highlighting the significance of this investigation [1].
CMA CEO Sarah Cardell stated that an SMS designation would empower the regulator to tackle remaining concerns around Microsoft's cloud licensing and help maintain fair competition as AI is embedded in business software [1]. Microsoft President Brad Smith responded by affirming the company's commitment to working 'quickly and constructively' with the CMA and acknowledged that the regulator will continue to review additional issues related to Microsoft's products and services [1].
The SMS designation is not a finding of wrongdoing but requires companies to adhere to rules preventing abuse of dominant positions. Previously, Google and Apple received SMS designations for their mobile platforms in October [1]. The CMA's July findings from its cloud services market investigation revealed that Microsoft and Amazon Web Services (AWS) each held a 30-40% share of the infrastructure-as-a-service (IaaS) market, which includes processing, storage, networking, and other raw computing resources [1].
Following engagement with the CMA, both Microsoft and Amazon have outlined actions regarding cloud egress fees and interoperability. Amazon formalized its commitment to customer choice, data portability, and multicloud adoption, while Microsoft emphasized its efforts to reduce friction for UK customers moving workloads across cloud providers [1]. The investigation comes amid increasing scrutiny of Europe's reliance on U.S. tech systems for business and government operations [1].
CONCLUSION
The CMA's probe into Microsoft's business software ecosystem marks a significant regulatory development, with potential implications for cloud licensing practices and AI integration. With Microsoft and Amazon holding substantial market shares, the investigation could lead to changes that enhance competition and customer flexibility in the UK cloud market. The market is likely to closely monitor the outcome, given the high impact on enterprise software and cloud services.